February 21, 2008

Talking NASSCOM, offshoring and CIOs with Alex Blues

Alex Blues is a partner with PA Consulting in the UK, heading up the technology and IT services practice. He is quite a veteran of the Indian offshoring industry and so when I spoke to him at the NASSCOM conference it was in a whirlwind of appointments for us both. Fortunately, we managed to get our conference diaries to coincide long enough for a chat together.

Alex was in a happy frame of mind as well as he had just got married and the trip to NASSCOM was a part of his honeymoon. That’s dedication to your work, eh? Well, it was almost anyway – just that he had been touring South Asia with his new wife (congratulations to you both as well!) and he managed to work out the timing for his journey home so that he could spend some time at NASSCOM while she enjoyed some Mumbai shopping and spa time.

Alex initially gave me some of his thoughts on NASSCOM this year: “This is my fifth visit to NASSCOM and I have seen two key changes. The first is a broadening of the conference. This is not just about India. It’s really been a pleasure to see people from Egypt, Ireland, Wales, Costa Rica, Malaysia… and I think that really shows that NASSCOM is moving from being a conference about India to being the biggest global outsourcing conference. That’s really because there is a maturing market and all of those locations are finding a link to India in some way.” He added a further key point that reflected some of the conference speeches: “The second thing is that I am hearing a lot more now that sourcing is moving up the value chain. It’s much more agility and flexibility and sourcing for innovation rather than cost. So there are some real changes in the approach to the market. Last year people really started talking about outcome-based solutions here and this year practically everyone has talked about culture and output rather than input-based solutions.”

Alex has been doing research recently into the role of the Chief Information Officer and how many sourcing decisions are these days far more related to business pressures, rather than technology related. He outlined some of his research: “At PA we have just concluded a survey with Harvey Nash that looks at changes in the CIO community. The role of the CIO is changing. The CIO is far more linked to driving business, not IT. The average tenure of a CIO now is 24 to 36 months, so the role of the CIO is changing. Either they are coming in as an agent of change, then once they succeed they move on to a new role – or they fail to change the organisation and so they move on anyway.” Alex was keen to emphasise that this really means that a more holistic approach to corporate relationships is required: “If you take a 24-month tenure and assume it takes 6 months to get your feet under the desk and 6 months to leave then there is a very short window of time in which the job can be done. This is the difficulty for suppliers in influencing the CIO. One of the most telling statements I heard yesterday at NASSCOM was someone saying that CIOs used to ask the ‘where’ question and they now ask the ‘why’ question. Within PA we are keen to work with people at the board level on what is really happening, not just sourcing as a deal by deal process.”

Alex was keen to emphasise that he was not even prescribing the type of sourcing. In fact, he proposed a far more mature purchasing process: “You might also notice that I have not used the ‘out’ word yet. I am keen to explore sourcing in all its various forms, and not just as outsourcing. Sourcing is a boardroom tool for competitive advantage and the solutions are becoming more complex. It has been amazing in the past that people will go to suppliers with a very prescriptive RFP detailing the solution they want, rather than just outlining a business problem and getting the suppliers to figure out the best possible solution. It might be any form of sourcing, but the key is to choose the best solution.”

I asked Alex if some of the international economics pressures we see in the news at present are a cause for concern. He said: “There are some international economic concerns, but the UK market is extremely different to the US market. In the UK as far as working with India, it really is business as usual. People have already started looking beyond the hotspots of Bangalore to second or third-tier locations in India. It is important that the Indian supplier market continues to move up the value chain into areas such as KPO. It is really important for the Indian supplier community to realise that if they are only offering highly commoditised services then it is likely they can be performed just as well elsewhere, in Vietnam for example.” Though he added that it is still quite difficult to define KPO because: “…there are still not all that many KPO case studies yet, because it is still a source of competitive advantage. People are not yet standing up and talking about it openly because they want to keep that advantage.”

Alex mentioned Xansa as an industry leader without me even prompting him for a comment, and it was complimentary too: “I think we are seeing the beginnings of some Indian companies throwing off the India tag and becoming better known as global players. I predicted a couple of years ago that Indian companies would start getting involved in TUPE transfers (the legal transfer of employees from the customer to the supplier, so the people keep a similar job, but work for the supplier) and that has happened. Xansa was probably a leader in this regard, but TCS has also shown with Diligenta that it can be done successfully. I think that once you build that bigger UK presence then you really can adopt a more global attitude.”

Of course, Xansa and now Steria, have generally been better known as European companies with teams in India, rather than Indian companies with people in Europe, but you can see the point he is making. Once companies with teams in multiple locations take on new staff via TUPE transfers then they really start to establish a global footprint, with people getting paid by the same company in many locations around the world. It’s nice to hear someone as respected as Alex mentioning Xansa as a leader without me even needing to offer him a glass of fine red wine for the quote!